VW and its former CEO have been charged with deliberately concealing its emissions scheme while selling billions in bonds

The U.S. Securities and Exchange Commission (SEC) on Thursday charged Volkswagen and its former chief executive Martin Winterkorn with defrauding U.S. bond investors by not informing them of the scope of its diesel emissions scheme sooner.

"Volkswagen hid its decade long emissions scheme while it was selling billions of dollars of its bonds to investors at inflated prices," said Stephanie Avakian, the co-director of the SEC's Division of Enforcement, in a press release....

They face up to twenty years in prison

Amy Martyn is a writer and investigative reporter now based ...
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A federal grand jury in Detroit indicted four former German Audi officials on Thursday over the diesel emissions scandal, court documents reveal.

The executives -- Richard Bauder, Axel Eiser, Stefan Knirsch, and Carsten Nagel -- were charged with multiple counts of violating the Clean Air Act, conspiracy to defraud the United States, and wire fraud. If convicted, each charge carries up to 20 years in prison.

Volkswagen moved closer to putting the "dirty diesel" scandal behind it this week as U.S. District Court Judge Charles Breyer gave preliminary approval to a plan under which VW would pay about $1.2 billion to fix or buy back about 80,000 3.0-liter diesel vehicles.

That amount could increase to $4 billion if the Environmental Protection Agency and other regulators don't approve of VW's proposed fixes to all of the 3.0-liter Audi, Porsche, and Volkswagen models.

The ruling doesn't set a precedent but could result in more filings by consumers

At least one consumer has succeeded in getting Volkswagen to buy back his car because of the "dirty diesel" scandal, using Florida's Lemon Law.

Walter Melnyk, 86, turned to the Lemon Law after his VW dealer refused to buy back his car despite the company's admission that it used deceptive software to enable its TD Clean Diesel cars to pass emissions tests.

Although the ruling by the Lemon Law board, technically called the Florida New Motor Vehicle Arbitration Board, does ...

Volkswagen has apologized and suspended sales of its "clean diesel" cars in the U.S. after federal and California officials charged the cars were clean only when hooked up to emissions testing devices and dirty the rest of the time.

Whether an apology will be enough to placate outraged VW owners is doubtful. "I am furious at Volkswagon for intentionally lying to me. I want to return my 2010 to Volkswagen for a full refund," said photographer and VW owner Joshua Ets-Hokin in a Facebook comment.

"This is almost unbelievable," said Daryl Allen, a semi-retired engineering graduate of the Masschusetts Institute of Technology, expressing the disbelief with which many VW fans greeted the news.

"Wow, how shady and deceptive from a company that claims to be so environmental!" said another Facebook commenter, J'On Bradley, a heavy equipment operator.

German engineering

Volkswagen, revered by many consumers for turning out precision-engineered high-tech cars at modest prices, has for years promoted its TDI turbodiesels as a clean and efficient alternative to hybrids so the news that the cars allegedly put out 40 times the allowed levels of diesel pollution left many of its most loyal customers dismayed and bitterly disillusioned.

Consumers immediately began complaining that their cars would lose much of their resale value and class-action lawyers were expected to be close behind.

VW itself seemed taken aback by Friday's announcement by the Environmental Protection Agency but finally managed to get out a brief statement attributed to its CEO on Sunday.

Martin Winterkorn
"I personally am deeply sorry that we have broken the trust of our customers and the public," said Prof. Dr. Martin Winterkorn. "We will cooperate fully with the responsible agencies, with transparency and urgency, to clearly, openly, and completely establish all of the facts of this case. Volkswagen has ordered an external investigation of this matter.

"We do not and will not tolerate violations of any kind of our internal rules or of the law, Winterkorn insisted as the company announced that it was suspending sales of all vehicles equipped with the four-cylinder TDI -- turbo direct injection -- engine. The engine is used in VW Golf, Jetta, Passat and Bettle models as well as the Audi A3."

It's estimated that about 482,000 of the cars were manufactured and sold -- and are still on the road -- leaving owners of those vehicles waiting for the next shoe to drop.

It is a near certainty that VW will recall the cars to remove the allegedly illegal software that deceives emission inspection stations but whether it will be able to bring the cars into compliance with clean-air regulations without hampering their performance and gas-mileage is not known.

Damage to the brand

Volkswagen faces up to $18 billion in fines and could be criminally prosecuted. But even more severe than any legal penalty may be the damage done to VW's brand.

The dirty diesel scandal is bringing forth a wave of other complaints from VW customers, many of them having to do with excessive oil consumption in gas engines, a complaint VW shares with some other German cars.

A VW owner named Mike contacted us shortly after the diesel story broke, complaining that his gas-powered Tiguan -- Volkswagen's popular small SUV -- is constantly "upshifting" in an apparent effort to improve gas mileage.

"On a level surface at normal acceleration it shifts into 5th gear (1st overdrive) at 27 mph and 6th gear (2nd overdrive) at 32 mph. That means on normal neighborhood driving you are in 6th gear and can make milkshakes most of the way," Mike said.

"I'm far from a mechanic but do know enough to know if you consistently lug an engine you'll rip the bottom out of it before long. Along the way you'll start to burn large amounts of oil before the rings blow," Mike said. "I've got no way to know when I'm going to wind up with a blown engine but I'm certain after speaking to many mechanics about lugging it's just a matter of time."

Slow Sport mode

A ConsumerAffairs staff member who drives a Tiguan said he shifts into the "Sport" mode when driving around town. It makes for a jerky ride and wastes gas but keeps the RPMs up, he said, thus avoiding the "lugging" issue. He tells his wife to do the same, telling her the "S" stands for "Slow."

Mike's comments are similar to those made a few years ago by Pete, a Fairfax, Va., mechanic who specialized in old Alfa Romeos, which burn oil like a furnace. That's not unusual in cars from the 1970s but Pete said it was completely unacceptable in newer cars and flatly recommended that his customers replace their VWs with Japanese cars.

Pete's advice may have gone a little far but sadly, the ConsumerAffairs database has many complaints from VW owners complaining of engine failure related to low oil levels.

"At 48,000 engine blew. VW of Springfield said we had not changed oil frequently enough (we changed it more often than required/necessary but I could not find one receipt!)," said Ernie of El Dorado Springs, Mo., speaking of his Volkswagen Toureg.

For those not yet ready to take Pete's advice, it's a good idea to manually check the oil level at least weekly.

Volkswagen has apologized and suspended sales of its "clean diesel" cars in the U.S. after federal and California officials charged the cars were clean only when hooked up to emissions testing devices and dirty the rest of the time.

Whether an apology will be enough to placate outraged VW owners is doubtful. "I am furious at Volkswagon for intentionally lying to me. I want to return my 2010 to Volkswagen for a full refund," said photographer and VW owner Joshua Ets-Hokin...

Retrofitting the rest will be a long and expensive process

A German newspaper report says Volkswagen may buy back about 115,000 cars in the United States as a result of the "dirty diesel" scandal. Another 450,000 will need extensive retrofitting to meet U.S. emission standards, the report said.

The Sueddeutsche Zeitung said that VW expects it will have to either refund the purchase price or offer owners a new car at a significant discount. It's thought that would apply to older cars that would be too expensive to retrofit.

Even newer cars will require extensive -- and expensive -- work, as parts of the exhaust system will have to be rebuilt, the report said.

Although Volkswagen says it will continue producing diesels for the U.S. market, it is also talking up plans to build more electric cars. At the Consumer Electronics Show, it displayed mock-ups of an electric model that's a modernized remake of the VW minibus.

Reports earlier this week said VW was apparently doing some behind-the-scenes maneuvering to reduce its liability to class-action lawsuits. A bill in Congress, dubbed the "VW bail-out bill" by critics, would make it harder to assemble large groups of consumers to pursue class-action cases.

The measure is sponsored by Rep. Bob Goodlatte, a Virginia Republican. Volkswagen's U.S. headquarters is in Virginia, near Dulles Airport.

A German newspaper report says Volkswagen may buy back about 115,000 cars in the United States as a result of the "dirty diesel" scandal. Another 450,000 will need extensive retrofitting to meet U.S. emission standards, the report said.

The Sueddeutsche Zeitung said that VW expects it will have to either refund the purchase price or offer owners a new car at a significant discount. It's thought that would apply to older cars that would be too expensive to retrofit.

Three-quarters of respondents are familiar with the scandal

Companies are often tempted to "sit out" scandals and other bouts of bad publicity, but Gallup finds that may not be possible for Volkswagen. Fully three quarters of respondents say they are familiar with the VW "dirty diesel" scandal that came to light in September.

Not only is awareness high but consumers are taking it seriously. Four in 10 (41%) say VW's use of deceptive software to trick emissions testing equipment makes them less likely to buy a Volkswagen, while 29% say the news will have no impact on their future buying decisions. Another 28% said they would never have considered buying a Volkswagen in the first place.

When it comes to Volkswagen's reputation, the majority of consumers (69%) believe the emissions scandal will have a major or moderate impact on its brand, Gallup said.

Gallup also asked respondents to use three words or short phrases to describe the Volkswagen brand. Based on a brand analysis, Gallup determined that Volkswagen's desired or projected brand could most accurately be described using words such as "reliable," "fun" and "environmentally friendly."

But that message is no longer getting through. A mere 1.6% of respondents used these or other keywords that aligned with the Volkswagen brand, while 16% used words such as "dishonest," "liar" and "cheater" to describe the company's brand.

Down but not out

In Gallup's analysis, the VW brand is down but not out. It has a core group of customers who strongly believe in its brand.

About seven in 10 fully engaged customers say the Volkswagen scandal has no impact on their decision to purchase from the brand (71%); only 37% of actively disengaged customers say the same. Instead, two-thirds of actively disengaged customers say that they are less likely to purchase a Volkswagen.

Volkswagen's recovery will depend on rebuilding brand trust first with customers who are not fully engaged and then with new customers, Gallup analysts said.

Legal challenges

Besides the court of public opinion, VW faces an enormous number of competing lawsuits and regulatory actions. In New Orleans today, federal judges are trying to devise a strategy to speed things along. They're likely to consolidate most of the consumer cases and assign them to an appropriate court.

There's not much legal controversy involved. Volkswagen has already admitted rigging its 2.0- and 3.0-liter diesel engines to produce artificially low emissions when hooked up to testing equipment. The only real issue is how consumers should be compensated for the reduced value of their cars and for punitive damages.

The company has set aside about $20 billion to cover legal and recall costs.

Companies are often tempted to "sit out" scandals and other bouts of bad publicity, but Gallup finds that may not be possible for Volkswagen. Fully three quarters of respondents say they are familiar with the VW "dirty diesel" scandal that came to light in September.

Not only is awareness high but consumers are taking it seriously. Four in 10 (41%) say VW's use of deceptive software to trick emissions testing equipment makes them less likely to buy a Volkswagen, while 29...

Violations found in VW, Audi and Porsche models with 3.0-liter engines

It's not just the 2.0-liter Volkswagen TDI diesel engines that use illegal software to fool emission checks, the U.S. Environmental Protection Agency said today.

The EPA says several VW, Porsche, and Audi models with 3.0-liter diesels have been found with "defeat device" software similar to that used on nearly half a million of the smaller TDI engines.

The agency today issued a new Notice of Violation to Volkswagen, Audi, and Porsche saying that it found several models with the illegal defeat devices.

The models are:

2014 VW Touareg;

2015 Porsche Cayenne; and

2016 Audi A6 Quattro, A7 Quattro, A8, A8L, and Q5 crossover.

The notice includes only models with the 3.0-liter diesel engine.

"Once again failed"

"The EPA's investigation into this matter is continuing," the notice said. "The EPA may find additional violations as the investigation continues."

EPA said the software on the 3.0-liter engines increases emissions of nitrogen oxide (NOx) up to nine times the legal standard when the car is not hooked up to emissions-measuring equipment.

“VW has once again failed its obligation to comply with the law that protects clean air for all Americans,” said Cynthia Giles, Assistant Administrator for the Office for EPA’s Enforcement and Compliance Assurance. “All companies should be playing by the same rules. EPA, with our state, and federal partners, will continue to investigate these serious matters, to secure the benefits of the Clean Air Act, ensure a level playing field for responsible businesses, and to ensure consumers get the environmental performance they expect.”

Both the EPA and the California Air Resources Board (CARB) are investigating the latest alleged violations. The new notice covers approximately 10,000 diesel passenger cars already sold in the United States since model year 2014. In addition, it includes an unknown volume of 2016 vehicles.

"On September 25, the California Air Resources Board sent letters to all manufacturers letting them know we would be screening vehicles for potential defeat devices,” said Richard Corey, Executive Officer of the California Air Resources Board. “Since then ARB, EPA and Environment Canada have continued test programs on additional diesel-powered passenger cars and SUVs.

"Serious concerns"

"These tests have raised serious concerns about the presence of defeat devices on additional VW, Audi and Porsche vehicles. Today we are requiring VW Group to address these issues. This is a very serious public health matter. ARB and EPA will continue to conduct a rigorous investigation that includes testing more vehicles until all of the facts are out in the open," Corey said.

As in the 2.0-liter engines, EPA said VW "manufactured and installed software in the electronic control module of these vehicles that senses when the vehicle is being tested for compliance with EPA emissions standards."

"When the vehicle senses that it is undergoing a federal emissions test procedure, it operates in a low NOx 'temperature conditioning' mode, EPA said. "Under that mode, the vehicle meets emission standards. At exactly one second after the completion of the initial phases of the standard test procedure, the vehicle immediately changes a number of operating parameters that increase NOx emissions and indicates in the software that it is transitioning to 'normal mode,' where emissions of NOx increase up to nine times the EPA standard, depending on the vehicle and type of driving conditions."

It's not just the 2.0-liter Volkswagen TDI diesel engines that use illegal software to fool emission checks, the U.S. Environmental Protection Agency said today.

The EPA says several VW, Porsche, and Audi models with 3.0-liter diesels have been found with "defeat device" software similar to that used on nearly half a million of the smaller TDI engines.

The agency today issued a new Notice of Violation to Volkswagen, Audi, and Porsche saying that it found several models ...

But industry analysts say the carmaker has dug itself a deeper hole

The Environmental Protection Agency's (EPA) charge that Volkswagen's diesel cheating scandal is more widespread than originally reported brought shock from industry analysts and denial from the German automaker.

As we reported Monday, the EPA has determined that several VW, Porsche, and Audi models with 3.0-liter diesels have been found with "defeat device" software similar to that used on nearly half a million of the smaller TDI engines.

“Permissible software”

But VW is denying the charges, with a company spokesman telling The Wall Street Journal that the cars contain “permissible software” and suggesting the U.S. government agency has an ulterior motive.

“What’s at issue here is clear – does the U.S. want competition in the American market or not?” the spokesman told the Journal.

In a separate statement, Porsche Cars North America said it was blindsided by the EPA finding.

“We are surprised to learn this information,” the statement said. “Until this notice, all of our information was that the Porsche Cayenne Diesel is fully compliant.”

Casting a shadow

But Karl Brauer, senior analyst for Kelley Blue Book (KBB), says the official expansion of the U.S. government probe casts a darker shadow on the entire VW Group.

“It also makes any past claims of ‘a limited number of people’ involved in the deception appear even more outrageous,” Brauer said. “Volkswagen would do well to immediately and completely disclose all people and products involved in this deception, no matter how far-reaching. Repairing the automaker’s brand and regaining trust should be VW Group’s highest priority at this point, but it can’t begin until full and voluntary disclosure is achieved.”

Fellow analyst Rebecca Lindland, senior director of commercial insights for KBB, says the EPA action Monday should not have come as a real surprise.

“This just makes official what we all suspected – no make or model was spared this treatment since the technology was shared across all diesel engines in the VW family,” she said.

Heftier fines and costs

Lindland says the result for the beleaguered automaker will be potential fines that will be even greater than first calculated, and more expensive fixes as well.

“Whatever compensation they come up with may satisfy a VW Jetta owner, but is less likely to satisfy a Porsche Cayenne owner who paid so much more for their vehicle,” Lindland said.

According to Car and Driver, the software the EPA says deceived emissions test equipment is used for cold starting diesel engines. It's perfectly legal for that purpose.

“However, Volkswagen violated the law by not disclosing this software to the EPA and by employing code that explicitly switched the car’s emissions system from a bench-testing mode that actually outperformed federal standards to allowing dirtier emissions under regular conditions,” the magazine explained.

In the month since the diesel cheating scandal broke, VW sales in the U.S. have taken a hit. The real impact from this latest EPA action, says Michelle Krebs, senior analyst at Autotrader, is the damage to the Volkswagen brand is likely to spread to the popular Audi brand as well.

The Environmental Protection Agency's (EPA) charge that Volkswagen's diesel cheating scandal is more widespread than originally reported brought shock from industry analysts and denial from the German automaker.

As we reported Monday, the EPA has determined that several VW, Porsche, and Audi models with 3.0-liter diesels have been found with "defeat device" software similar to that used on nearly half a million of the smaller TDI engines.

The case adds 85,000 vehicles to existing dirty diesel suits

Volkswagen is building a world-class collection of lawsuits. The latest was filed last week on behalf of owners of 85,000 Audi, Porsche and Volkswagens equipped with the 3.0-liter diesel engines.

The suit follows charges by the Environmental Protection Agency that the 3.0-liter diesels in 2009-2016 models used an illegal "defeat device" similar to that used on a much larger number of 2.0-liter "clean diesel" engines.

Owners of certain Audi, Porsche, and VW models will get cash or engine modifications

Car sales may be slowing a little bit, but if so, you can't blame Volkswagen, which has been handing out cash to hundreds of thousands of "clean diesel" owners. The latest settlement, expected to total about $1 billion, will line the pockets of consumers who owned or leased a 3.0-liter TDI VW, Audi, or Porsche from certain model years.

VW earlier agreed to pay nearly $20 billion to buy back cars and settle civil and criminal charges growing out of its use of deceptive s...

The automaker has agreed to settle a probe that took place in Germany

Volkswagen’s subsidiary Audi has been hit with a fine of nearly $930 million over its role in the diesel emissions cheating scandal that first began unfolding three years ago.

In a statement on Tuesday, the automaker said it accepted the fine and does not plan to appeal.

“Audi AG has accepted the fine” imposed by German prosecutors for “deviations from regulatory requirements in certain V6 and V8 diesel aggregates (motors) and diesel vehicles,” the company said in a stat...

Fines could cost VW billions; criminal charges also possible

The Justice Department today hit Volkswagen with a lawsuit charging that the automaker violated the Clean Air Act by installing defeat devices on some VW, Audi, and Porsche diesel vehicles that would not otherwise have met federal emission standards.

Possible penalties could reach into the billions of dollars and criminal charges against VW are still possible, Justice Department officials said. The automaker also faces numerous class action lawsuits filed on behalf of co...

Regulators in California have reportedly found a second defeat device on some Audi models

It looks like VW isn’t out of the woods yet when it comes to its connection with defeat devices. Forbes reports that regulators from the California Air Resources Board (CARB) have allegedly found another unreported defeat device that misrepresented carbon dioxide emissions on certain Audi models.

Worse yet, Bild am Sonntag – a German publication – has found a document wherein Audi chief of powertrains Axel Eiser discusses the defeat feature and how it will be “100% activ...

Rupert Stadler was arrested due to his connection to Volkswagen’s ‘dieselgate’ scandal

Rupert Stadler, the CEO of Volkswagen’s Audi division, was arrested on Monday over “concerns over potential evidence tampering” in the probe of Volkswagen’s diesel-emissions cheating case.

The arrest comes one week after the executive’s home was raided by authorities, who afterwards named him a suspect in their investigation into fraud and falsifying public documents in relation to the “dieselgate” scandal.

Details of the settlement have not yet been released

Volkswagen has encountered another hefty toll on the dirty diesel highway, agreeing to pay $1 billion to fix or buy back about 80,000 VW, Audi, and Porsche vehicles equipped with 3.0-liter TDI diesel engines.

The agreement settles suits brought by federal and California regulators. So far, VW has tossed about $17.5 billion into the coin basket and it still faces billions of dollars in fines and expenses as it tries to settle state and federal damage claims and criminal i...

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